The Portugal international is going in to the final year of his contract at the Bernabeu, and new manager Rafa Benitez is yet to be convinced to offer him a new deal. The 32-year-old could lose his position to the younger Raphael Varane under the former Liverpool boss, after already being rotated with the France international in the last campaign.

Were the Premier League duo to go after the defender this summer it is likely Los Blancos would ask for around £10.5 million, but they could get him for free if they wait. As he is in the final 12 months of his contract they will be allowed to negotiate a deal with the centre-back from January with view to a free transfer at the end of the season.

However, with Pepe not getting any younger it would be surprising if either team went after the former Porto ace. The Blues already have John Terry, Gary Cahill, and Kurt Zouma in the position, and possibly only need a long term replacement for their captain. Meanwhile the Citizens do have problems at the back, but are likely to try and get a player who can solve the issues more permanently than one or two years.